Office in city centre for sale at £2.5m

WITH few high quality office investments on offer on the Dublin market, there is likely to be strong interest in a modern office block at 33 Molesworth Street, Dublin 2, which is rented under a long lease by Hibernian Insurance.

Finnegan Menton is quoting a guideline price of £2.3 million to £2.5 million for Lisle House, an 18,600-square-foot building which is to be sold by tender on December 12th.

The building has 12,500 square-feet of open plan offices on two floors behind a restored period building. It is one of the best located office buildings in the city, within a few minutes' walk of the Dail, Grafton Street and St Stephen's Green.

The entire building is let to Hibernian Insurance on a 33-year full-repairing and insuring lease from January, 1976. The insurance company sub-let the block to CSK Ireland, which trades as Quay Financial Software.

The current rent of £185,000 per annum equates to £9.60 per square foot and £1,000 for each of the seven car-parking spaces.

Finnegan Menton is anticipating a "substantial reversion" not only because of the significant upgrading of the building in the past year but also because of the marked increase in rent levels in the area since the last review took place in 1994. The next review is due in January, 1999.

The rear access to Lisle House is from Schoolhouse Lane where new 375-space car-park has just been completed.

Office buildings like Lisle House with a strong covenant and a security of income have been selling particularly well in recent years. Most of them have been bought by business and professional people or consortiums as a means of funding their pensions. Sales have been greatly helped by the fact that interest rates are at their lowest for two decades.

With some banks offering fixed-rates for five years at around 7.5 per cent, investors are borrowing substantial funds to buy buildings where the rental income is guaranteed under a long lease.

In the past year, spending by private investors has far exceeded that of institutions.

Some of the major players are having to compete with the State for the first time as the Office of Public Works implements a new policy of buying office blocks where State agencies are locked into long leases.

Finnegan Menton handled the latest sale to the Office of Public Works, disposing of the headquarters building of Bord Iascaigh Mhara in Dun Laoghaire for £4 million. Significantly, the OPW did not bid when the building went to auction but subsequently agreed purchase terms because the lease has 20 years to run.

In some instances, the OPW may opt to sell on the buildings without the State tenants but such cases are likely to be rare because of the huge volume of space vacated by the public service over the past five years.